Date: 11/21/2011

Location: AK

With a current statewide wind energy capacity of approximately 10 megawatts (MW), Alaska will soon more than double its wind energy production thanks to a power purchase agreement signed in October. Chugach Electric Association (CEA), Alaska's largest electric utility, agreed to terms with Cook Inlet Region Inc. (CIRI) to purchase the energy produced by the 17.6-MW Fire Island Wind Project, allowing the project to move closer to completion.

According to Jim Jager, CIRI corporate communications director, the project began in the 1990s when CEA tried to diversify its power generation portfolio. CEA was interested in wind energy as an alternative to natural gas and conducted a survey of south-central Alaska to identify the best potential wind sites. Fire Island quickly rose to the top of the list because of proximity to the load center, land availability, lack of conflicting land uses, and a relatively low risk of potential environmental impacts.

"As you go down the checklist, Fire Island is a very attractive site. CIRI owns the majority of Fire Island, so CEA approached CIRI and asked if we would be interested. We said yes. That's when the Fire Island Wind Project was born," Jager said.

Soon after, anemometer tests to determine the strength of the wind resource commenced. According to Jager, around this time CEA's board members changed and the utility dropped out of the project. At that point, CIRI proceeded on its own to search for project funding.

CIRI qualified for $19 million in funding through a Section 1603 American Recovery and Reinvestment Act tax credit for the project and $25 million of state grant funding for submarine and mainland transmission infrastructure that would link the wind farm with the Anchorage electrical grid. CIRI began preliminary construction, but before the project could move forward, the project had to overcome many hurdles, including finding a utility to purchase the power, demonstrating that the integration of wind into the relatively small Alaska grid would not impact power quality, and obtaining approval from the Regulatory Commission of Alaska.

Although many of the local utilities and power cooperatives were initially apprehensive about how 17.6 MW of wind energy would be integrated into the power grid, CIRI was able to ease those concerns with support from the National Renewable Energy Laboratory (NREL).

According to Brian Hirsch, senior project leader for NREL's Alaska initiative, the lab's role in the project was to provide technical assistance and analysis on grid stability and integration issues and resource assessment verification. Primarily through NREL, the Department of Energy Wind Program has provided technical support for the deployment of wind technologies in Alaska for more than 10 years, including direct funding to the Renewable Energy Alaska Project that has worked to support projects like Fire Island and other renewable energy activities across the state. The Fire Island project has been a long-term goal of the Alaska Wind Working Group, which works to educate stakeholders about using wind energy in the Last Frontier.

Once the technical concerns were alleviated, power purchase negotiations continued until CEA signed on to purchase the energy at a flat net price of $97 per megawatt-hour for 25 years beginning on January 1, 2013. The project is expected to supply approximately 4% of CEA's electric load. Although the cost of energy for consumers will be slightly higher than the current average price, the flat rate is expected to make the cost more attractive as gas and power prices increase in the future. In its October 10 ruling, the Regulatory Commission of Alaska approved the project, indicating that the project is a good way to support the Alaska Legislators' push to expand the use of renewable energy at a very minimal cost to CEA's members. The true benefit of the project will be determined over time based on the actual cost of future natural gas prices and the real costs of the operational integration of the wind farm.

The project will feature 11 GE 1.6-MW turbines configured for the Arctic environment and will cost approximately $65 million, which Jager credits to a combination of events.

"Right now there's a bit of an oversupply of wind turbines on the market, so that decreases the prices of the equipment," Jager said.

Jager also said that the project was able to take advantage of the tax credit for renewable energy projects and that due to the state of the economy, construction companies are willing to bid lower on project contracts than a few years ago.

"The confluence of those three events has helped to keep the cost of this project down," he said.

The Fire Island project will employ between 100 and 120 workers during construction, with on-island workers numbering between 80 and 100 at any given time. Though on-island work won't resume until Cook Inlet is ice-free again in April 2012, plans call for shore-side construction work on transmission infrastructure in the near future. Jager expects to generate the first power in the beginning of September 2012, with the project online soon thereafter. Six permanent positions will be created for the operation and maintenance of the facility.

Although a great deal of time has been devoted to bringing this project closer to fruition, the delay was not the result of a lack of support from the local community.

"The community support has been overwhelming. We've done public polling that shows that in excess of 80% of the public supports the idea of diversifying with Fire Island Wind Power. A significant majority, more than 70%, said they would be happy to pay an extra $2 a month, if that's what it takes, to bring Fire Island to generation," Jager said.

The involvement of DOE and Wind Powering America was initiated early in Alaska, primarily focused on the implementation of wind technology in rural parts of the state.

"Fire Island has been a very interesting project since it was envisioned," said Ian Baring-Gould, Wind Powering America's national technical director. "Not only is the project situated right off the coast of Alaska's most populous city, it is right off the flight path for Ted Stevens International Airport and will serve as another clear example of how the state is working to obtain 50% of its electric generation from renewable and alternative sources by 2025, becoming a living example of the state's motto, 'North to the Future.' This project also clearly demonstrates how over time organizations with differing goals and responsibilities can work together to implement a new technology such as wind. The integration of wind into the Alaskan Railbelt grid is not a trivial issue, and it required the technical collaboration of many organizations and individuals. The leadership and staff of Chugach Electric should be commended for their efforts, as should the leaders of CIRI, who have worked tirelessly, and at times against seemingly insurmountable odds, to get this project this far."

According to Hirsch, Fire Island Wind Project is an important step for Alaskan wind energy as a whole.

"Fire Island is opening the door for large-scale renewable energy on the Railbelt, both for Independent Power Producers and utility-led projects. We're already seeing some additional development as a result of it in terms of other large-scale wind projects," Hirsch said.

This information was last updated on November 28, 2011

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